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Microsoft Stock Hits Record High After Q1 Profits Top $20 Billion On Cloud Strength

Microsoft profits topped $20 billion for the first time ever last quarter, as booming cloud demand lifted overall sales to a record $45.3 billion, taking the stock to a fresh record high.

Microsoft  (MSFT) - Get Microsoft Corporation (MSFT) Report shares hit a fresh record high Thursday after the tech giant posted first quarter profits of more than $20 billion, powered in part by booming demand for its cloud computing services.

Microsoft said revenues for Azure, its flagship cloud division, rose 48% from last year, helping overall group revenues rise 22% to a record $45.3 billion for the three months ending in September, Microsoft's fiscal first quarter. The group's bottom line was also a record, at $20.5 billion, as earnings rose nearly 25% from last year to $2.27 per share.

Looking into the December quarter, Microsoft said cloud revenues could rise to around $18.2 billion, alongside in personal computing and its business division, but cautioned that supply chain disruptions may hit sales of its popular XBox gaming console.

"We have the most diversified set of digital businesses and we are innovating to expand our opportunity across the entire portfolio to help our customers in this new era," CEO Satya Nadella told investors on a conference call late Tuesday. "Next week, we’ll hold our flagship Ignite conference where we will share the next chapter of Microsoft Cloud from the metaverse to large scale AI from hybrid work to hybrid infrastructure. I couldn’t be more optimistic about the opportunities ahead."

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Microsoft shares were marked 24.3% higher in late-morning trading to change hands at $323.40 each, a move that would extend the stock's year-to-date gain to around 45%. The stock hit a fresh all-time high of $324.80 each earlier in the session.

Revenue from the group's productivity and business process unit rose 22% to $15 billion, while intelligent cloud revenues surged 31% to $17 billion. Gaming revenues were up 16% and Windows OEM revenues grew 10%.

"Azure should see healthy growth and benefit from Microsoft 365 momentum, although this growth will moderate due to the installed base," said Oppenheimer analyst Timothy Horan, who carries an 'outperform' rating with a $330 price target on the stock.

"Azure is gaining share and should benefit from Arc, which helps large enterprises manage applications at the edge or in multi-cloud.